Security Bank ended 2015 as a banner year, racking up a record-high net profit of P7.7 billion on the back of strong growth in core revenues.
The net profit last year marked a 7-percent expansion from the previous year and translated to a return on equity of 15.2 percent. As earlier hinted, the bank has beaten the previous all-time high profit level of P7.5 billion posted in 2012.
Security Bank president and chief executive Alfonso Salcedo Jr. said: “2015 results exceeded our expectations. Customer loans grew at rates significantly above industry with no deterioration in the net NPL (non-performing loan) ratio. Likewise, deposits outpaced industry growth.”
“Core revenues are growing robustly, with the increase progressively making up for lower trading gains. Our three core businesses—wholesale banking, retail banking and financial markets/treasury—all contributed to produce record net profits this year,” Salcedo added.
The bank grew its loan book by 24 percent year-on-year to P240 billion while deposits also expanded by 17 percent to P290 billion.
Corporate and commercial loans increased by 21 percent while key consumer loan portfolios—composed of home and auto loans and credit card receivables—rose by 67 percent. Net interest income expanded by 11 percent to P12.4 billion. Net interest margin (NIM) stood at 3.3 percent.
Non-interest income likewise rose by 16 percent to P6.5 billion, driven by a 38-percent increase in fee-based income. The bank cited solid contribution from retail banking services such as bancassurance, credit cards and deposit transactions as well as from asset management.
The bank earned P2 billion from the sale of securities, lower than the P3.1 billion posted in 2014. Core revenues, which comprise net interest income, fee-based income and trading gains attributable to customer flows, grew by 15 percent to P15.6 billion.
On the expenditure side, the bank spent 50 centavos to earn every P1 in 2015. Operating expenses, excluding provisions for probable credit losses and impairments, went up by 20 percent as the bank continued to invest to build up its retail banking business and improve service to customers.
The bank’s total assets jumped by 34 percent year-on-year to P532 billion. It ended the year with 262 branches and 555 ATMs (automated teller machines).
Asset quality remained healthy, with net NPL ratio at 0.14 percent of total loans, lower than the 0.28 percent in 2014. This was among the lowest in the industry while the NPL reserve cover of 205 percent was among the highest.
“Shareholders’ capital increased 14 percent to P53.2 billion from retained earnings. Our Basel 3 capital adequacy ratios (CARs) are healthy, with common equity tier 1 at 12.2 percent and total CAR at 15.2 percent, which are well above the regulator’s required minimum of 8.5 percent and 10 percent, respectively,” said Security Bank chief financial officer Joselito Mape.
Last month, Japan’s biggest banking group Bank of Tokyo-Mitsubishi UFJ struck a deal to buy a 20-percent stake in Security Bank for P36.9 billion, touted as a “game-changing” partnership seen to catapult the local bank to be the country’s fourth largest in the next few years.